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Charter Forced to Set Aside $13 Million for Failing to Meet Merger Commitments to New York State

Phillip Dampier June 20, 2017 Charter Spectrum, Consumer News, Public Policy & Gov't, Rural Broadband 6 Comments

The New York State Department of Public Service today announced it had reached a potential settlement with Charter Communications after the company failed to meet its rural broadband expansion obligation outlined in last year’s approval of its acquisition of Time Warner Cable.

“The [Public Service] Commission conditioned its approval of the merger on Charter’s agreement to undertake several types of investments and other activities,” said Department interim CEO Gregg C. Sayre. “While Charter is delivering on many of them, it failed to expand the reach of its network to un-served and under-served communities and commercial customers in the time allotted.”

While Charter’s merger with Time Warner Cable and Bright House Networks won rubber-stamp approval in almost every state where it operates, New York regulators required the merger to directly benefit the state’s consumers. The company must upgrade customers to 100Mbps service by the end of 2018 and offer at least 300Mbps statewide by the end of 2019. But it must also expand its cable network to reach 145,000 unserved and underserved homes and businesses within the next four years. The merger approval agreement set a schedule to begin network expansion as quickly as possible.

Charter failed to achieve its obligations, only reaching 15,164 of the 36,250 customers it was required to reach one year after the merger deal was approved.

As a result, regulators have penalized Charter, requiring it to pay an extra $1 million in grants for computer equipment and internet access targeting low-income New York residents and set aside $12 million in escrow as a security pledge to meet all of its network expansion commitments going forward. The company now agrees it will complete its build out obligation in six increments of 21,646 customers through May 18, 2020. Charter will forfeit a portion of the $12 million each time it misses a deadline. The amount lost will depend on the percentage of the target missed and whether the company demonstrates it has completed necessary tasks to expand service. If the company manages to meet its deadlines going forward, it has the right to earn back some or all of its security pledge.

Charter has also agreed to develop a communications plan within 60 days of the settlement’s execution to inform New Yorkers whether they are part of the build-out plan.

The settlement offer will issued for public comment, and will require final Commission approval to take effect.

Currently there are 6 comments on this Article:

  1. FredH says:

    $13 Million is chump change – and they’re not even being fined that amount (only $1M so far) – $12M is a “set-aside” in case they don’t meet their future goals. Their net income in the 4th quarter of 2016 was $454 Million – on revenues of $10.3 Billion (with a “B”)…$13M is a rounding error in their books. My opinion – most of NY’s under and un-served folks will remain that way.

  2. Matthew H Mosher says:

    Give me a minute while I pick my jaw up off the floor.

  3. Matthew H Mosher says:

    I spoke with a Time Warner/Spectrum tech today, a very nice guy by the way. (Some background – I am the only house on my road without cable) I had signed up for service yesterday and the service rep thought I would be able to get connected. This morning the tech stopped by with bad news. The line is a 1/4 mile away and passes 5 National Grid poles, so it’s not going to happen. He totally understands the frustration as he hears from several potential customers in Franklin County every day. His opinion is it will only happen up here in the boonies if and when the government pays the entire cost.

    We are basically iliving in a time that mirrors the roll out of electricity. The companies are not going to front the costs. And FredH, you are right. This “penalty” is chump change. And the state will approve the settlement as is, of course. More useless government at “work”.

    • Yeah, because Charter is hurting so much it cannot afford to extend service itself so it wants welfare to do it.

      Keep in mind most techs have no clue where Charter is going in rural New York because they haven’t been told. Charter has told NYS, but only confidentially. In the next 60 days or so, people will know for sure.

      Also, before people get too down on New York, be aware it is the ONLY state in the country that chose to demand things of Charter from this merger that will actually cost them some money. It’s not enough IMHO, but it is MUCH more than the other states sought. In fact, all but New York and California simply rubber-stamped the deal as approved. No rural broadband expansion in those states at all.

  4. Matthew H Mosher says:

    Sure, but it’s pretty easy to crap on NY when my wife a d I pays these ridiculous tax rates so that MY KIDS can’t get broadband. Meanwhile it runs fiber throughout an Amish neighborhood five miles from me. Yeah, I’m down on New York.

    As far as the conditions, some good they have done. They don’t even abide by them.







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